CAE USA, Inc. entered into a definitive agreement to acquire L-3 Link Simulation & Training, AMI Instruments and L3 Doss Aviation, Inc. from L3Harris Technologies, Inc. for $1.1 billion.
March 28, 2021
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CAE USA, Inc. entered into a definitive agreement to acquire L-3 Link Simulation & Training, AMI Instruments and L3 Doss Aviation, Inc. from L3Harris Technologies, Inc. (NYSE:LHX) for $1.1 billion on February 27, 2021. The consideration is subject to customary adjustments. In a related transaction, Renk Aktiengesellschaft signed a definitive agreement to acquire Combat Propulsion Systems and related businesses of L3Harris Technologies, Inc. for approximately $400 million on March 1, 2021. The acquisition and other related transaction costs are to be funded through the issuance of approximately $550 million aggregate amount of subscription receipts to two institutional investors on a private placement basis as well as other currently available liquidities. On March 4, 2021, CAE completed the private placements of subscription receipts for aggregate gross proceeds of $550 million. The proceeds from the private placements will be held in escrow and are intended to be used by CAE to fund a portion of the purchase price for the acquisition of L3Harris Technologies’ Military Training business. On March 8, 2021, CAE announced the launch of a proposed underwritten marketed public offering of common shares in the United States and Canada for gross proceeds to the Corporation of approximately $250 million. The net proceeds of the offering will be used to finance a portion of the purchase price and related costs of the acquisition. Upon closing, the L3Harris Military Training business would operate under CAE USA, headquartered in Tampa, Florida. L3Harris Military Training employees will join CAE. L3Harris Military Training business reported an annual revenue of approximately $525 million in 2020.
The closing is subject to regulatory approvals, other customary closing conditions and HSR Act Clearance and Antitrust approval. As of June 28, 2021, the transaction has received all the required regulatory approvals. The closing of the Acquisition is expected in the second half of calendar year 2021. As announced on June 28, 2021, the transaction is expected to be closed on July 2, 2021. The acquisition is expected to be low-teens percentage EPS accretive to CAE in the first full year post closing, including expected cost synergies.
Chris Gallea and Michael Tarulli of Goldman Sachs & Co. LLC is acting as exclusive financial advisor on the acquisition and providing assistance on the Private Placements, Sarah Kahn of DLA Piper and Stephen Kelly, Amélie Métivier and Peter Wiazowski of Norton Rose Fulbright acted as legal advisors to CAE. Heidi Wood, Executive Vice President for business development and growth initiatives and President of CAE Healthcare, worked on the deal at the company along with General Counsel and Chief Compliance Officer Mark Hounsell. Miles Thomas, Ingle Phillip and Tarca Gregory of Morgan Stanley & Co. LLC is acting as financial advisor and Keith Pagnani and Scott Crofton of Sullivan & Cromwell LLP is serving as legal counsel for L3Harris. General Counsel Scott Mikuen, Deputy General Counsel David Reilly and Managing Counsel Kim O Rourke worked on the deal at L3Harris.
L3Harris Technologies, Inc. specializes in the design, manufacturing and marketing of information and communication equipment for the defense, government agency, and commercial structure markets. Net sales break down by family of products as follows:
- integrated mission systems (32.4%): intelligence, surveillance and reconnaissance systems, communication systems, electrical and electronic systems for marine platforms, advanced electro-optical and infrared solutions, etc. ;
- space and airborne systems (28.3%): payload systems, sensors, complete mission solutions, confidential intelligence systems, cyber defense solutions, electronic warfare systems, etc;
- communication systems (23.8%): tactical communication systems, broadband communications, integrated visual communications solutions, etc;
- aviation systems (15.5%): air defense systems, commercial aircraft equipment, pilot training solutions and air traffic management systems.
Net sales break down by source of income between sales of products (78.9%) and services (26.1%).
The United States account for 90.2% of net sales.
CAE USA, Inc. entered into a definitive agreement to acquire L-3 Link Simulation & Training, AMI Instruments and L3 Doss Aviation, Inc. from L3Harris Technologies, Inc. for $1.1 billion.